GIG Economic Bulletin – April 5, 2021

This week saw the official launch of Greece’s national recovery plan, dubbed “Greece 2.0”, which will channel funds totalling €57.5 from the EU Recovery & Resilience Facility and private investments into strategic priorities including the green transition, digital transformation, healthcare, and skills.

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Dubbed ‘Greece 2.0’, the new blueprint for Greece’s post-pandemic economic recovery was revealed by Prime Minister Kyriakos Mitsotakis, underlining competitiveness, openness, and increased digital transformation as key pillars. Progress is being made on a number of privatisation projects including two regional ports, mining company Larco, power distribution company HEDNO, and the Egnatia Highway. Meanwhile, new tax incentives targeting angel investors aim to boost investments in Greek start-ups.

Greece 2.0

Greek Prime Minister Kyriakos Mitsotakis unveiled Greece’s national recovery plan, dubbed “Greece 2.0”, which lays out the priorities for €57.5 billion in investments to be funded by the European Union’s Recovery and Resilience Facility combined with private funds. The plan includes 170 projects and reforms, and is expected to boost investment by 20%, add 7 percentage points to growth, and create 200,000 new jobs over a period of six years.

Of the €32 billion of EU funds earmarked for Greece, the first €4.2 billion of grants and €1.3 billion in loans could find their way into the economy as early as August.

Macro

Greece’s economic sentiment was up 5 points month-on-month in March at 96.9, according to data from the European Commission. All sectors showed improvement in March, but only construction rose above pre-Covid levels.

Manufacturing PMI rose to 51.8 points in March from 49.4 points in February according to index compiler Markit, crossing the line into positive territory since February 2020 (where a reading over 50 indicates general improvement). However, the Greek readings remain well below the eurozone level, which at 62.5 points is the highest in the last 24 months, and seem to have been influenced by supply chain disruptions.

Tourism

Industry forecasts put arrivals at Athens airport at 15% of 2019 in Q1, 25% in Q2 and 54% in Q3, while at regional airports traffic in the third quarter could reach 65% of 2019 levels. The figures rest on the assumption of an ebbing of the pandemic across Europe by late April, combined with an acceleration of vaccinations over the same period.

A study by Oxford Economics suggests that Athens will be the only European city to experience a recovery of its hospitality and entertainment sectors to pre-Covid levels in 2022. The city as a whole, however, will not be among the seven cities to recover to its pre-pandemic GDP levels in 2021. The Greek capital’s economy as a whole is expected to recover in 2022, with some economic activities lagging into 2023.

The overwhelming majority (90%) of respondents to a survey of the global hospitality and leisure sectors by Deloitte do not believe the European hospitality sector will rebound to pre-Covid levels before 2023.

Transport

German fund Axionair Limited plans to launch an airline offering seaplane links between some of the smaller Greek islands. The first routes are expected to cover the Ionian islands out of Corfu, while the total investment through the fund’s majority stake in Greek Water Airports is expected to reach an estimated added value of €100 million, delivering a boost to tourism in hard-to-reach destinations.

Start-ups

The government has introduced a new tax incentive aimed at encouraging investment in start-ups. Individuals or entities who meet the criteria of “Investment Angels” set out in the guidelines will be entitled to a tax deduction of 50% on funds invested in start-ups registered on the Elevate Greece platform. The deduction applies to individual investments up to €100,000, and a total of €300,000 annually.

Privatisations

Privatisation fund HRADF is expected to announce this week the shortlist of investors in the tenders for the ports of Alexandroupouli and Kavala, as well as mining company Larco. Four consortiums have expressed interest in Alexandroupoli, five in Kavala, and six for Larco.

Eleven potential bidders for the 49% stake in power distribution company HEDNO (DEDDIE) are being sifted by advisors Goldman Sachs and Eurobank with a view to finalising the shortlist for binding offers. The interested parties so far include major infrastructure funds and grid managers from North America and China, while the preferred bidder is expected to emerge over the summer.

The final bidders for the Egnatia Highway have been whittled down to two consortia, GEK Terna-Egis and Vinci-Mytilineos-Avax, without the participation of Aktor after the courts ruled them out of the tender.

Egnatia Highway Copyright: kanvag / shutterstock.com

Banks

Ratings agency Moody’s has upgraded its outlook for all four systemic banks from stable to positive. The prospect of lower NPEs through another round of loan securitisations and sales was the key driver in the agency’s decision.

NBG reported a net profit of €38 million in 2020, following a loss of €255 million in 2019. The bank also announced that it has entered an agreement for the sale of 90% of Ethniki Insurance to CVC Capital Partners for €455 million.

Covid-19 Measures

A new €3-billion emergency support package for businesses and households announced this week will bring the total bill for 2021 to €14 billion, double the initial amount budgeted for.

Catering businesses showing more than a 30% drop in sales in 2020 are in line for up to €100,000 in emergency support from a package of €330 million funded by EU structural funds.

Retail is due to reopen on April 5 in most of the country including Athens, under strict measures.

Stock Market

The ASE general index closed the week on Thursday, in advance of the western Easter holidays, with gains of 2.74% at 875.22 points.

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